Blog with MAE Capital

Down Grade by Standard and Poors

August 8th, 2011 10:18 AM by Gregg Mower

Is this just an exercise in a private rating agency telling the Government that they are terrible with monetary policy?

I think so, the world knows the US still is the highest rated government on the planet. I believe that if it really had any meaning whatsoever the government securities (i.e. bonds) should be in the tank not the stock market. So why are interest rates going lower? It is due to the fact that the world still sees the the US Government Bonds as a "safe Haven". Proof by the stock market selling off as people pull out of stocks and move towards Bonds just like it has been for decades. Interest rates push lower as the markets know that we are still in a recession or depression and that bonds are still perceived as the safest investment to be in during volatile times. BTW, S&P downgraded the US Bonds as they are the borrowing instrument of the Federal Government. "The marrkets are always right and we are sometimes."